decision analysis for quantitative method course

Quantitative methods assignment-June-2021 [Protected View] - Excel (Product Activation Failed) X File Home Insert Page Layout Formulas Data Review View PDFelement Tell me what you want to do.. Share i PROTECTED VIEW Be careful-files from the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. Enable Editing X A14 X V (i) The minimax criterion? [2 marks] A B C D E - A shop owner faces 3 investment options. He can either buy a new shop in another locality or rent additional space at his current location . His payoff under each investment option depends on whether the local tax regulator decides to implement one of three mutually exclusive and collectively exhaustive taxation schemes referred to as: mild taxation, average taxation and high taxation. The shop manager evaluates each option in terms of its payoff for the next 10 years. W N If the regulator decides to adopt a mild taxation scheme, the shop owner expects to earn Rs 11m if he invests in a new shop and Rs 5m if he decides to rent additional space. If the average taxation scheme is adopted, he expects to earn Rs 5m if he invests in a new shop and Rs6m if he rents additional space. Under the high taxation scheme, he expects to earn Rs 5m with a new shop and 7m if he decides to rent additional space. 40 00 - There is a 50% chance that the average taxation scheme is adopted and an equal chance that a low or a high taxation scheme is implemented. 10 11 (a) Construct a decision table based on the information provided above. [8 marks] 12 (b) What is the optimal investment decision under the: 13 14 0) The minimax criterion? [2 marks] 15 (ii) The minimax regret decision criterion? [5 marks] 16 (iii) The equal likelihood criterion? [3 marks] 17 (iv) The expected opportunity loss criterion? [5 marks] 18 (v) Draw a decision tree to advise the shop manager on the best decision. [8 marks] 19 20 21 22 23 Activate Windows Q1 Q2 + Go to Settings to activate Windows. Ready + 100% Type here to search 21:3 A ENG 08/06/2021